Budget 2012: company car writing down allowances

Author: Ralph Morton

Key points from Budget 2012

• 100% first year allowances extended to March 2015
• 100% FYA qualifying band reduced to sub 96g/km CO2 in 2013
• 18% qualifying band reduces from 160g/km CO2 to 130g/km
• 8% qualifying band for all cars over 130g/km

As with company car tax, Budget 2012 pushed the bands for company car writing down allowances – also known as capital allowances – downwards  to encourage businesses to buy more fuel-efficient business cars with reduced CO2 emissions.

From April 2012 the main rates for capital allowances change anyway, from 20% to 18%, and from 10% to 8%. But now the Chancellor has moved the CO2 goalposts for the qualifying criteria.

But let’s start with those company cars that qualify for first year writing down allowances (WDA).

100% First Year Allowances

Cars with CO2 emissions up to 120g/km currently qualify for full first year allowances, which helps significantly with accelerating cash flows.

From 01 April 2013, this changes and all cars purchased with emissions up to 95g/km will qualify for the capital allowances tax break.